Isabel Schnabel: Narratives about the ECB's monetary policy - reality or fiction?

Speech by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at the Juristische Studiengesellschaft, Karlsruhe, 11 February 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

In recent years, Germany has experienced one of the longest economic upswings since the Second World War. Since 2010 the German economy has grown at an average annual rate of 2%. Unemployment has fallen to its lowest level since German reunification.

The monetary policy of the ECB has contributed significantly to that expansion. By lowering interest rates and making use of new monetary policy instruments, the ECB has created financing conditions that support investment, growth and job creation across the euro area.

And it was the ECB's decisive action in 2012 that prevented a break-up of the euro area.

Despite these considerable successes, the public debate about monetary policy has become more heated in parts of the euro area, and especially in Germany.

The conversation is dominated by various narratives, such as the "expropriation" of German savers through "punishment rates", the "flood of money" that will inevitably lead to massive inflation, and the creation of "zombie firms" as a result of expansionary monetary policy.

In my remarks today, I would like to take a closer look at some of these narratives and discuss them in the light of the facts.